OVERVIEW
Risk-On Remains Intact, Selectivity Critical

Macro

• CPI +0.4% MoM (2.9% YoY), core steady at 3.1%.

• Sticky, but not a shock. Fed cut next week still priced at 88%.

• Debate now is pace of cuts after September.

QQQ

• Daily looks heavy, hourly constructive.

• Reversal off hourly 20EMA on strong volume; premarket back at $582–585.

• 585 = continuation to $590–592. <577 = first real bearish shift.

MDY

• Pullback continues, but volume is contracting — no distribution.

• $596 demand is the pivot; above it = digestion, not breakdown.

• Large-cap tech has taken leadership.

IWM

• Flag intact with higher lows since August.

• Short-term momentum fading; IWM/SPX ratio back under 10EMA.

• Neutral-to-constructive >$233, but not leadership.

AMPX

• Breakout attempt rejected, but demand absorbed the weakness.

• Lithium-ion theme strong; setup remains constructive inside XLI base.

XLU

• After August selling, bounced off rising 20W EMA (~$82.50).

• High-volume reversal reclaimed 10/20/50-day EMAs.

• Not leadership, but defensive flows stabilizing supports risk.

MARKET ANALYSIS
No Surprise With Inflation: What Now?

August CPI came in broadly as expected, with just a marginal upside surprise on the headline. Prices rose 0.4% month-on-month versus 0.3% expected, lifting the annual rate to 2.9% from 2.7%.

Core inflation was unchanged at 3.1% year-on-year, posting another +0.3% monthly gain. Gasoline and food were the sticky drivers, but there was no meaningful change to the underlying trend.

What matters is how the market reads this. Inflation is still above target, but the print wasn’t hot enough to alter the Fed’s near-term path. According to the CME FedWatch tool, futures are now pricing an 88% probability of a quarter-point cut at next week’s FOMC meeting. In other words, the first cut is effectively locked in.

The real debate begins after September. Sticky inflation caps how far and fast the Fed can ease, while the labor market is flashing the opposite signal as jobless claims just spiked to their highest level in almost four years.

hat policy tension is unresolved, and it will dictate whether this turns into a one-and-done adjustment or the start of a deeper easing cycle.

Nasdaq

% over 20 EMA: 39.60% | % over 50 EMA: 41.58% | % over 200 EMA: 54.45%

On the surface, the daily chart looks soft: yesterday failed to produce the decisive breakout extension traders were watching for, leaving QQQ stalled just below the $582–585 supply shelf. But that read misses what’s happening beneath the surface.

The hourly tape shows controlled digestion, not failure. The rejection came with declining relative volume, while the subsequent drift lower was absorbed cleanly at the hourly 20EMA.

Crucially, the reversal higher in the final hour printed as a bullish engulfing bar on a sharp spike in relative volume which in itself is a demand signature you don’t ignore.

That bid is carrying through into premarket with QQQ marked higher toward the same supply band.

How to frame today:

• Gap-and-hold above $585 → clears the most important supply overhang in the near term. That flips the shelf into demand and validates continuation higher, with upside extension toward $590–592. Expect momentum accounts to chase strength if volume confirms.

• Gap-and-fade back into $577–579 → still constructive. That zone aligns with yesterday’s defended demand and the hourly EMA cluster. As long as it holds, the tape remains in controlled consolidation. Think absorption, not reversal.

• Break below $577 with volume → that would be the first true character shift lower. It reopens the downside toward $570–572 (heavy VRVP node) and forces longs to respect risk (this is outright bearish).

S&P 400 Midcap

% over 20 EMA: 51.25% | % over 50 EMA: 60.75% | % over 200 EMA: 59.00%

MDY has been fading since last week’s evening star reversal, but the key tell is in the volume profile.

The past three sessions have seen price decline on contracting relative volume, not expanding. That matters as typically genuine distribution requires sellers to press with size, and so far, that isn’t what the tape is showing.

For now, demand still sits at the $5996 band, reinforced by a dense VRVP node and this is a zone we believe is likely to hold today.

Until that zone breaks on heavy sell volume, we don’t view this pullback as a bearish development. It’s digestion inside the uptrend rather than a structural shift lower.

That said, the leadership rotation has clearly moved away from midcaps. The past week’s consistent momentum has been almost entirely concentrated in large cap tech and a handful of highly selective names.

MDY may hold its ground here, but the outperformance versus QQQ is behind us.

Russell 2000

% over 20 EMA: 54.63% | % over 50 EMA: 63.13% | % over 200 EMA: 59.34%

The flag structure in IWM remains intact, with a clear series of higher lows since late August. The past four sessions have produced a mild pullback, but importantly, that decline has come on light relative volume.

However, when we step back to relative terms, the picture shifts. The IWM/SPX ratio has rolled back below its daily 10EMA after a strong surge through August. That tells us the short-term relative strength impulse in small caps is fading.

It’s not a short signal, but it does reinforce the same message we’re seeing across the tape: choppy action, with leadership narrowing elsewhere.

Seasonality adds another layer as September is historically the weakest month for equities, with the S&P’s median return at –0.81% going back decades.

Small caps tend to feel that drag more than large caps, which makes the relative stall here unsurprising.

Our Read: The IWM setup is still neutral-to-constructive above $233–234, but the loss of relative momentum versus SPX is a clear signal. Strength in IWM is stalling but that doesn’t mean it is breaking.

That simply means capital is better concentrated in leadership groups rather than betting on small caps to lead in the near term.

FOCUSED STOCK
AMPX: A Relative Strength Leader

ADR%: 8.35% | Off 52-week high: -23.7% | Above 52-week low: +1101.9%

AMPX closed at $7.37 (-5.75%), giving back its breakout attempt above descending resistance. The rejection looked heavy on the surface, but context matters.

Into the close/pre-market this morning, weakness was absorbed and bought back up, keeping AMPX anchored near the breakout zone rather than collapsing back into range. That’s constructive as typically failed breakouts that don’t unravel (become invalidated and break wider structure) often point to underlying demand building beneath the tape.

Fundamentally, the lithium-ion battery theme continues to hold up well across the board, with money rotating into mobility and EV-related innovation (see DRIV ETF).

From a group perspective, the XLI complex has itself built a clean volatility contraction over recent weeks and AMPX is one of the individual names reflecting that coiled structure.

FOCUSED GROUP
XLU: Utilities On A Powerful Dip Buy

Utilities have been under steady pressure for weeks, selling off hard through August. That makes yesterday’s session stand out.

XLU came right into its rising 20-week EMA, a level that also acted as resistance back in May/June 2025. This time, instead of breaking lower, we saw a sharp rejection at ~$82.50, followed by a high relative volume recovery.

The follow-through was decisive. XLU not only bounced from that key weekly level, but also powered back above its declining 10-, 20-, and 50-day EMAs all of which had been acting as resistance during the August selloff.

That’s the definition of a character shift: prior supply zones turning into demand.

Why it matters: Utilities aren’t a high-beta leadership group, but they’re a bellwether for risk appetite. After sustained weakness, yesterday’s reversal signals defensive flows stabilizing. It doesn’t make XLU the top hunting ground for momentum longs, but it does suggest that selling pressure in the most defensive sector is easing. This very might may turn into a deeper rotation signal.